<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant Rule 14a-11(c) or Rule 240.14a-12
</TABLE>
SEEQ Technology Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)3.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SEEQ TECHNOLOGY INCORPORATED
47200 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 25, 1999
TO OUR STOCKHOLDERS:
You are invited to attend the Annual Meeting of Stockholders of SEEQ
TECHNOLOGY INCORPORATED, a Delaware corporation (the "Company"), to be held on
Thursday, February 25, 1999 at 3:00 p.m., local time, at the offices of the
Company at 47200 Bayside Parkway, Fremont, California 94538, for the following
purposes:
1. To elect directors to serve for the ensuing year;
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending September 26,
1999;
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement that accompanies this Notice.
Only stockholders of record at the close of business on January 15, 1999,
are entitled to notice of and to vote at the Annual Meeting and at any
continuation or adjournment thereof.
By order of the Board of Directors
/s/ Gary R. Fish
Gary R. Fish
Secretary
Fremont, California
January 26, 1999
<PAGE> 3
SEEQ TECHNOLOGY INCORPORATED
------------------------
PROXY STATEMENT
------------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
SEEQ TECHNOLOGY INCORPORATED
TO BE HELD FEBRUARY 25, 1999
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of SEEQ Technology Incorporated, a Delaware corporation
(the "Company" or "SEEQ"), of proxies to be voted at the Annual Meeting of
Stockholders to be held on February 25, 1999, or at any adjournment or
postponement thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. Stockholders of record on January 15, 1999 will
be entitled to vote at the Annual Meeting. The Annual Meeting will be held at
3:00 p.m. at the principal executive offices of the Company located at 47200
Bayside Parkway, Fremont, California 94538.
It is anticipated that this Proxy Statement and the enclosed proxy card
will be first mailed to stockholders on or about January 26, 1999.
VOTING RIGHTS
The close of business on January 15, 1999 was the record date for
stockholders entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof. As of January 15, 1999, there were 32,247,752 shares of
the Company's common stock ("Common Stock") outstanding. Holders of Common Stock
are entitled to one vote for each share of Common Stock so held. A majority of
shares of Common Stock entitled to vote will constitute a quorum for the
transaction of business at the Annual Meeting.
If any stockholder is unable to attend the Annual Meeting, such stockholder
may vote by proxy. The enclosed proxy card is solicited by the Company's Board
of Directors (the "Board of Directors" or the "Board") and, when the proxy card
is returned properly completed, it will be voted as directed by the stockholder
on the proxy card. Stockholders are urged to specify their choices on the proxy
card. If a proxy card is signed and returned without choices specified, in the
absence of contrary instructions, the shares of Common Stock represented by such
proxy will be voted FOR Proposal Nos. 1, 2 and 3 and in the discretion of the
proxy holders as to other matters that may properly come before the Annual
Meeting. Management does not know of any matters to be presented at this Annual
Meeting other than those set forth in this Proxy Statement and in the Notice
accompanying this Proxy Statement. If other matters should properly come before
the meeting, the proxy holders will vote on such matters in accordance with
their best judgment.
An affirmative vote of a majority of the shares present and voting at the
meeting is required for approval of all items being submitted to the
stockholders for their consideration. Abstentions and broker non-votes are
included in determining the number of shares present and voting at the Annual
Meeting and each is tabulated separately.
VOTES REQUIRED
PROPOSAL 1. Directors are elected by a plurality of the affirmative votes
cast by those shares present in person, or represented by proxy, and entitled to
vote at the Annual Meeting. The three (3) nominees for director receiving the
highest number of affirmative votes will be elected. Abstentions and broker
non-votes are not counted toward a nominee's total. Stockholders may not
cumulate votes in the election of directors.
PROPOSAL 2. Ratification of the appointment of PricewaterhouseCoopers LLP
as the Company's independent public accountants for the fiscal year ending
September 26, 1999 requires the affirmative vote of a majority of those shares
present in person, or represented by proxy, and cast either affirmatively or
negatively
<PAGE> 4
at the Annual Meeting. Abstentions and broker non-votes will not be treated as
having been voted on the proposal.
The Annual Report of the Company for the fiscal year ended September 27,
1998 will be mailed concurrently with the mailing of the Notice of Annual
Meeting and Proxy Statement to all stockholders entitled to notice of and to
vote at the Annual Meeting.
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time before its
exercise. A proxy may be revoked by filing with the Secretary of the Company an
instrument of revocation or a duly executed proxy bearing a later date, or may
be revoked by attending the Annual Meeting and voting in person.
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
to forward to such beneficial owners. The Company may reimburse such persons for
their costs of forwarding the solicitation materials to such beneficial owners.
The original solicitation of proxies by mail may be supplemented by solicitation
by telephone, telegram, or other means by directors, officers, employees or
agents of the Company. No additional compensation will be paid to these
individuals for any such services. Except as described above, the Company does
not intend to solicit proxies other than by mail.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The bylaws of the Company provide that the authorized number of directors
of the Company shall be set by resolution of the Board of Directors. As of the
date of this Proxy Statement, the number of directors presently authorized by
the Board of Directors is four directors. One of the present directors of the
Company, Charles C. Harwood, will not be standing for re-election at the Annual
Meeting and his term will expire upon the date of the Annual Meeting. The Board
of Directors has adopted a resolution, effective upon the date of the Annual
Meeting, that reduces the authorized number of directors of the Company to
three. Each director to be elected at the Annual Meeting will hold office until
the next annual meeting of stockholders and until a successor for such director
is elected and has been qualified, or until the death, resignation, or removal
of such director. There are three (3) nominees, each of whom is currently a
director of the Company. Each of the Company's current directors was elected to
the Board by the stockholders at the last annual meeting. Each person nominated
for election has agreed to serve if elected, and the Board of Directors has no
reason to believe that any nominee will be unavailable or will decline to serve.
In the event, however, that any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the current Board of Directors to fill the
vacancy. In the event that additional persons are nominated for election as
directors, the proxyholders intend to vote all proxies received by them for the
nominees listed below. Unless otherwise instructed, the proxyholders will vote
the proxies received by them for the nominees named below. The three (3)
candidates receiving the highest number of the affirmative votes of the shares
entitled to vote at the Annual Meeting will be elected directors of the Company.
Abstentions and broker non-votes will not be counted towards a nominee's total.
The proxies solicited by this Proxy Statement may not be voted for more than
three nominees.
2
<PAGE> 5
NOMINEES
Set forth below is information regarding the nominees to the Board of
Directors:
<TABLE>
<CAPTION>
NAME AGE
---- ---
<S> <C>
Alan V. Gregory............................................. 65
Phillip J. Salsbury......................................... 56
Charles H. Giancarlo........................................ 41
</TABLE>
Alan V. Gregory has served as a member of the Board of Directors of the
Company since August 1992 and as the Company's Chairman of the Board since
October 1993. Since 1983, Mr. Gregory has been President, Chief Executive
Officer and Chairman of the Board of Directors of XECOM, Inc., a modem
manufacturer. From 1978 to 1983, Mr. Gregory was a private investor. From 1975
to 1978, he served as Vice President and General Manager of the MOS Divisions of
Fairchild Semiconductor Incorporated, a semiconductor manufacturer. From 1969 to
1975, Mr. Gregory was employed by Signetics Corporation, a semiconductor
manufacturer, and served as Corporate Vice President and General Manager of the
Analog Division from 1973 to 1975. Mr. Gregory was also a co-founder of Omni
Technology Incorporated, an electronics test services company, and served as one
of its directors from 1980 to 1986. Mr. Gregory holds a B.S. in electrical
engineering from Northeastern University and is currently a Director of the
National Council for Northeastern University.
Phillip J. Salsbury, Ph.D., a founder of the Company, has served as the
Company's President and Chief Executive Officer since October 1993. Dr. Salsbury
has been a member of the Board of Directors since the founding of the Company in
1981 and, from 1981 to September 1993, served as the Company's Vice President,
Chief Technical Officer and Secretary. From 1973 until 1980, Dr. Salsbury served
in various engineering management positions for Intel Corporation, a
semiconductor manufacturer. Dr. Salsbury is a co-inventor for nine patents in
the area of MOS (metal oxide silicon) devices and circuits. Dr. Salsbury holds a
B.S. in electrical engineering from the University of Michigan and a M.S.E.E.
and Ph.D. from Stanford University.
Charles H. Giancarlo has served as a member of the Board of Directors of
the Company since August 1997. Since September 1998, Mr. Giancarlo has been Vice
President of Global Alliances at Cisco Systems, Inc. ("Cisco") and was Vice
President of Business Development at Cisco from September 1995 to September 1998
and Director of Business Development at Cisco from December 1994 to September
1995. Prior to joining Cisco, Mr. Giancarlo was a vice president responsible for
product marketing and corporate development at Kalpana, Inc. and was a founder
of and Vice President of Marketing for Adaptive Corporation. Mr. Giancarlo holds
a B.S.E.E. from Brown University, M.S.E.E. from the University of California,
Berkeley and an M.B.A. from Harvard University.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE
ABOVE NOMINEES FOR ELECTION AS DIRECTORS.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held seven (7) meetings during fiscal 1998. Each
director attended more than seventy-five percent (75%) of the aggregate of (i)
the total number of meetings of the Board of Directors held during the fiscal
year, and (ii) the total number of meetings held by all committees of the Board
on which such director served.
The Audit Committee of the Board of Directors recommends engagement of the
Company's independent accountants, approves services performed by such
accountants, and reviews and evaluates the Company's accounting system and its
system of internal controls. This committee, which consists of Directors Gregory
and Harwood, held one (1) meeting during fiscal 1998.
The Compensation Committee of the Board of Directors has overall
responsibility for the Company's compensation policies and determines the
compensation payable to the Company's executive officers,
3
<PAGE> 6
including their participation in certain of the Company's employee benefit
plans. This committee, which consists of Directors Gregory and Harwood, held one
(1) meeting during fiscal 1998.
The Stock Option Committee of the Board of Directors has the exclusive
authority to administer the Company's Restated 1982 Stock Option Plan (the "1982
Option Plan") and to make stock option grants under the 1982 Option Plan,
including grants to executive officers. This committee, which consists of
Directors Gregory and Harwood, held seven (7) meetings during fiscal 1998.
DIRECTOR COMPENSATION
It is the general policy of the Company that each nonemployee director of
the Company who is not appointed as a director pursuant to any contractual or
other right or arrangement be paid $2,000 for each quarterly meeting of the
Board of Directors attended and $1,000 per meeting for certain additional Board
or committee meetings attended. In addition, each such director is also eligible
for reimbursement according to the Company's policy for expenses incurred in
connection with attendance at meetings of the Board of Directors and the
committees thereof. Each of Messrs. Gregory and Giancarlo are eligible for this
compensation.
Options are granted periodically under the Company's 1989 Non-Employee
Director Stock Option Plan (the "Director Option Plan") to each individual who
is not an employee of the Company and has not been appointed or elected as a
director pursuant to any contractual or other right or arrangement. Under the
Director Option Plan, Mr. Gregory received a 10,000 share option grant in March
1995 with an exercise price of $2.438 per share, a 40,000 share grant in March
1996, with an exercise price of $3.688 per share, a 10,000 share grant in March
1997 with an exercise price of $2.125 per share and a 10,000 share grant in
March 1998, with an exercise price of $2.3438 per share; and Mr. Harwood
received two 10,000 share option grants in March 1996, each with an exercise
price of $3.688 per share and a 10,000 share grant in March 1998, with an
exercise price of $2.3438 per share. Mr. Giancarlo received an option to
purchase 20,000 shares on August 18, 1997 at an exercise price of $2.3125 per
share.
No other compensation is paid to directors of the Company in respect of
their services as directors.
MANAGEMENT
Set forth below is information regarding the executive officers of the
Company who are not directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Gary R. Fish.................... 48 Vice President, Finance and Administration, Chief
Financial Officer and Secretary
Robert C. Frostholm............. 50 Vice President, Sales and Marketing
Christopher E. Mann............. 38 Vice President, Design Engineering
James D. Middleton.............. 43 Vice President, Manufacturing Operations
</TABLE>
Gary R. Fish has served as Vice President, Finance and Administration,
Chief Financial Officer and Secretary for the Company since May 1997. From April
1995 to May 1997, Mr. Fish served as Corporate Controller. Prior to becoming
Corporate Controller, Mr. Fish held senior management positions since joining
the Company in 1983. Prior to joining the Company, Mr. Fish held management
positions at Applied Materials, Inc. and Saxon Industries Incorporated. Mr. Fish
holds a B.S. in Business Administration from the Haas School of Business at the
University of California, Berkeley.
Robert C. Frostholm has served as Vice President, Sales and Marketing for
the Company since April 1997. Prior to joining the Company, Mr. Frostholm was
Director of Product Sales for Philips Semiconductors, a division of Philips
Electronics N.V., a semiconductor manufacturer. Mr. Frostholm has also held
senior marketing and sales positions at Siliconix incorporated, Allegro
Micro-Systems, Seagate Technology, Inc. and National Semiconductor Corporation.
Mr. Frostholm holds a B.S. in Electrical Engineering from San Francisco State
University.
4
<PAGE> 7
Christopher E. Mann has served as Vice President, Design Engineering since
May 1998. Mr. Mann previously was a development director for Philips
Semiconductors, a division of Philips Electronics N.V. ("Philips"). Before
joining Philips, Mr. Mann held positions at Motorola, Inc., Siliconix
incorporated, and Seagate Technology, Inc. Mr. Mann holds a B.S. in Electrical
Engineering from Iowa State University and a M.S. degree in Engineering-Economic
Systems from Stanford University.
James D. Middleton has served as Vice President, Manufacturing Operations
since March 1998. From December 1996 to March 1998, Mr. Middleton served as
Manufacturing Operations Director of the Company. From August 1992 until
December 1996, Mr. Middleton was a product and test engineering manager at
TelCom Semiconductor, Inc. From March 1986 to August 1992, Mr. Middleton was a
product and test engineering manager at the Company. Mr. Middleton holds a B.S.
degree in Chemical Engineering from Oklahoma State University.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of December 31, 1998 (based upon shares
outstanding) certain information with respect to shares beneficially owned by
(i) each person who is known by the Company to be the beneficial owner of more
than five percent of the Company's outstanding shares of Common Stock, (ii) each
of the Company's directors, and the executive officers named in the Summary
Compensation Table and (iii) all current directors and executive officers as a
group. Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons share the
power to vote or the power to dispose of the shares). In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire shares (for example, upon exercise of an option or warrant) within sixty
(60) days of the date as of which the information is provided; in computing the
percentage ownership of any person, the amount of shares is deemed to include
the amount of shares beneficially owned by such person (and only such person) by
reason of such acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the following table does not necessarily
reflect the person's actual voting power at any particular date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
-----------------------
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS
------------------------ --------- ----------
<S> <C> <C>
Travelers Group, Inc........................................ 3,605,000 11.2%
388 Greenwich Street
Legal Dept 20th Floor
New York, NY 10013
Atmel Corporation........................................... 2,114,711 6.6%
2325 Orchard Parkway
San Jose, CA 95131
Phillip J. Salsbury......................................... 428,811(2) 1.3%
Alan V. Gregory............................................. 248,650(3) *
Charles C. Harwood.......................................... 156,000(4) *
Charles H. Giancarlo........................................ 20,000(5) *
Gary R. Fish................................................ 12,620(6) *
Robert C. Frostholm......................................... 16,000 *
James D. Middleton.......................................... 3,375 *
All current directors and executive officers as a group (8
persons).................................................. 885,556(7) 2.7%
</TABLE>
- ---------------
* Less than one percent.
(1) Unless otherwise indicated, each of the beneficial owners named in the table
has sole voting and investment power with respect to all shares shown as
owned by them, subject to applicable community property laws.
5
<PAGE> 8
(2) Excludes 1,333 shares of Common Stock owned by trusts for the benefit of Dr.
Salsbury's children, as to which Dr. Salsbury disclaims beneficial
ownership. Includes 335,208 shares of Common Stock issuable upon exercise of
options that are exercisable within 60 days after December 31, 1998.
(3) Includes 110,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1998.
(4) Includes 60,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1998.
(5) Includes 20,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1998.
(6) Includes 10,620 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1998.
(7) Includes 535,828 share of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1998.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely upon review of copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 27, 1998, all
Section 16(a) filing requirements were complied with that are applicable to the
Company's officers, directors and greater than ten percent stockholders.
6
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation earned by the Company's Chief Executive Officer and each of the
three other most highly compensated executive officers of the Company earning at
least $100,000 in salary and bonus (determined as of the end of the last fiscal
year) for services rendered in all capacities to the Company and its
subsidiaries for the 1998, 1997 and 1996 fiscal years. Such individuals will be
hereinafter referred to as the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- AWARDS
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(2) OPTIONS(4) ($)(5)
------------------ ------ ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Phillip J. Salsbury.................. 1998 230,100 0 0 788,821 800
President and Chief Executive
Officer 1997 227,250 35,000 0 100,000 48,270
1996 209,350 0 0 250,000 60,000
Robert C. Frostholm.................. 1998 144,616 30,093(3) 11,100 200,000 800
Vice President, Sales and Marketing 1997 58,154 26,000(3) 4,985 200,000 600
1996 0 0 0 0 0
James D. Middleton................... 1998 133,750 0 0 245,000 800
Vice President, 1997 99,831 10,000 0 85,000 600
Manufacturing Operations 1996 0 0 0 0 0
Gary R. Fish......................... 1998 115,077 0 0 130,000 800
Vice President, Finance and 1997 99,722 8,000 0 130,000 600
Administration, Chief Financial
Officer 1996 92,047 10,000 0 0 0
</TABLE>
- ---------------
(1) Includes amounts deferred under the Company's Retirement Income (401(k))
Plan.
(2) Represents the automobile allowance paid to Mr. Frostholm.
(3) Represents commissions paid to Mr. Frostholm.
(4) Each of the options reported as granted in fiscal year 1998 was originally
granted in an earlier year, then canceled and regranted on September 15,
1998, except for an option to purchase 80,000 shares granted to Mr.
Middleton. See "Stock Option Repricing."
(5) All amounts shown in the column "All Other Compensation" represent: (i) $800
and $600 of matching contribution to the 401(k) Plan in fiscal years 1998
and 1997, respectively, (ii) the amount of forgiven indebtedness which the
Named Executive Officer owed to the Company under the promissory notes such
Named Executive Officer delivered in payment of the option exercise price of
certain stock options granted under the 1982 Option Plan, and (iii) the
amount reimbursed to the Named Executive Officer for the income tax
liability incurred as a result of the forgiveness of such promissory notes.
During fiscal year 1996, the amounts forgiven and reimbursed were as
follows: Dr. Salsbury: $60,000 reimbursed. During fiscal year 1997, the
amounts forgiven and reimbursed were as follows: Dr. Salsbury; $47,670
reimbursed.
SUPPLEMENTAL CASH BONUS PLAN
The Supplemental Cash Bonus Plan was implemented as a special program to
provide certain officers with an opportunity to earn additional compensation to
be applied to the satisfaction of their outstanding indebtedness to the Company
arising from the exercise of the stock options granted to them under the
Company's 1982 Option Plan. At the time those options were exercised, the rules
of the Securities and Exchange Commission applicable to short-swing trading
transactions in the Company's Common Stock required the officer to hold the
purchased shares for at least six months before those shares could be sold
without short-swing liability. In order to avoid liquidity problems for the
officers, the Company permitted the option exercise price to be paid through a
promissory note. The purchased shares were then held by the
7
<PAGE> 10
Company as security for the notes and were to be released as the shares were
sold and the proceeds applied to the payment of the notes. During fiscal 1987
and 1988, the Company accepted promissory notes from the following Named
Executive Officers in payment of the option exercise price for the number of
shares specified for each such individual: Dr. Salsbury: 110,208 shares at an
average exercise price of $4.18 per share or an aggregate indebtedness of
$460,539.
Under the Supplemental Cash Bonus Plan, each officer of the Company with an
outstanding promissory note under the 1982 Option Plan was to receive an annual
cash payment equal to the interest due and payable on his promissory note plus
an amount to reimburse him for the additional income tax incurred as a result of
the payment. No executive officer to whom payments have been made under the
Supplemental Cash Bonus Plan has received any amounts thereunder in excess of
that necessary to satisfy the interest payment due on his promissory note and
the taxes payable on the bonus. The promissory notes were fully repaid in March
1995.
STOCK OPTIONS
The following table sets forth information concerning the stock options
granted under the 1982 Option Plan during the 1998 fiscal year to the Named
Executive Officers. The table also sets forth hypothetical gains or potential
"option spreads" for those options at the end of their respective ten-year
terms. These potential realizable values are based on the assumption that the
market price of Common Stock will appreciate at the rate of five percent (5%)
and ten percent (10%), compounded annually, from the date the option was granted
to the last day of the full option term. The actual value realized upon the
exercise of these options, if any, will be dependent upon the future performance
of the Common Stock and overall market conditions. During the 1998 fiscal year,
no stock appreciation rights were granted to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR
OPTIONS EMPLOYEES EXERCISE OPTION TERM(2)
GRANTED IN FISCAL PRICE PER EXPIRATION --------------------------
NAME (NO. OF SHARES) YEAR(1) SHARE($) DATE 5%($) 10%($)
---- --------------- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Philip J. Salsbury..... 788,821(3) 19.19% 1.0625 9/15/08 527,091 1,335,751
James D. Middleton..... 80,000 1.95% 1.9463 3/10/08 117,920 298,833
James D. Middleton..... 165,000(3) 4.01% 1.0625 9/15/08 110,253 279,403
Gary R. Fish........... 130,000(3) 3.16% 1.0625 9/15/08 86,866 220,136
Robert C. Frostholm.... 200,000(3) 4.87% 1.0625 9/15/08 133,640 338,670
</TABLE>
- ---------------
(1) The Company granted options to purchase a total of 4,110,000 shares of
Common Stock to employees during the year ended September 27, 1998, of which
3,527,000 shares were repriced on September 15, 1998. See "Stock Option
Repricing."
(2) The five percent (5%) and ten percent (10%) assumed annual rates of compound
stock price appreciation are mandated by the rules of the SEC and do not
represent the Company's estimate or a projection by the Company of future
stock prices.
(3) Represents options that were repriced on September 15, 1998, not new grants.
See "Stock Option Repricing."
8
<PAGE> 11
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the number of
shares subject to exercisable and unexercisable stock options held by the Named
Executive Officers as of September 27, 1998. No named Executive Officer
exercised options during the fiscal year ended September 27, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS AT
UNDERLYING UNEXERCISED FISCAL YEAR END (MARKET
OPTIONS AT FISCAL YEAR END PRICE OF SHARES LESS
(NO. OF SHARES) EXERCISE PRICE)($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Philip J. Salsbury......................... 335,208 788,821 0 0
Gary R. Fish............................... 10,620 130,000 0 0
Robert C. Frostholm........................ 0 200,000 0 0
James D. Middleton......................... 0 165,000 0 0
</TABLE>
- ---------------
(1) "In-the-money" options are options whose exercise price was less than the
market price of Common Stock at September 27, 1998. Assuming a fair market
value of $0.9375 per share, which was the closing price of a share of Common
Stock reported on the Nasdaq National Market for the trading day preceding
September 27, 1998.
STOCK OPTION REPRICING
STOCK OPTION COMMITTEE REPORT ON REPRICING OF STOCK OPTIONS
On September 15, 1998, the Stock Option Committee of the Board of Directors
approved a plan pursuant to which certain officers and employees were allowed to
exchange options with exercise prices in excess of the then current fair market
value for new options having exercise prices equal to $1.0625, the then current
fair market value of the Common Stock. Certain employees and each of the
executive officers exchanged their options. Recipients of the repriced options
were required to satisfy a 12-month vesting cliff or suspension period before
any portion of the repriced option became exercisable. Thereafter the repriced
options vest over a 60 month period, with credit for vesting earned prior to the
repricing and during the 12-month suspension period. Any employee whose
employment terminates prior to the date that was 12 months from September 15,
1998 will lose his or her option.
Stock options are intended to provide incentives to the Company's officers
and employees. The Stock Option Committee believes that such equity incentives
are a significant factor in the Company's ability to attract, retain and
motivate key employees who are critical to the Company's long-term success. The
Stock Option Committee further believes that, at their original exercise prices,
the disparity between the exercise price of these options and the then market
prices for the Common Stock did not provide meaningful incentives to the
employees holding the options. A review of other companies in the semiconductor
industry indicates that some of these companies have been confronted with this
problem and have made similar adjustments in option prices to motivate their
employees.
The Stock Option Committee approved the repricing of options as a means of
ensuring that optionees will continue to have meaningful equity incentives to
work toward the Company's success. The adjustment was deemed by the Stock Option
Committee to be in the best interests of the Company and its stockholders.
Submitted by the Stock Option Committee of the Board of Directors:
Alan V. Gregory, Member, Stock Option Committee
Charles C. Harwood, Member, Stock Option Committee
9
<PAGE> 12
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OPTION TERM
UNDERLYING OF STOCK AT EXERCISE PRICE REMAINING AT
OPTIONS/SARS TIME OF AT TIME OF NEW EXERCISE DATE OF
NAME DATE REPRICED(#) REPRICING($) REPRICING($) PRICE($) REPRICING
---- ------- ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Phillip J. Salsbury....... 9/15/98 363,821 1.0625 1.3750 1.0625 24 months
9/15/98 100,000 1.0625 1.4375 1.0625 104 months
9/15/98 75,000 1.0625 1.5630 1.0625 55 months
9/15/98 125,000 1.0625 2.7500 1.0625 90 months
9/15/98 125,000 1.0625 3.4380 1.0625 95 months
Robert C. Frostholm....... 9/15/98 200,000 1.0625 1.4375 1.0625 104 months
Christopher Mann.......... 9/15/98 250,000 1.0625 2.1250 1.0625 117 months
James D. Middleton........ 9/15/98 25,000 1.0625 1.4375 1.0625 104 months
9/15/98 80,000 1.0625 2.3438 1.0625 114 months
9/15/98 60,000 1.0625 2.3750 1.0625 101 months
Gary R. Fish.............. 9/15/98 100,000 1.0625 1.4375 1.0625 104 months
9/15/98 30,000 1.0625 2.4063 1.0625 102 months
</TABLE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committees of the Board of Directors (the
"Committees") administer the Company's compensation policies and programs. The
Compensation Committee makes and reviews recommendations regarding the Company's
compensation policies and executive compensation, including setting the base
salaries of the Company's executive officers, approving individual bonuses and
bonus programs for executive officers, and administering certain of the
Company's stock option and other employee benefit plans. The Stock Option
Committee is solely responsible for administering the Company's 1982 Stock
Option Plan, under which grants may be made to executive officers and other key
employees. The following is a summary of policies of the Committees that affect
the compensation paid to executive officers, as reflected in the tables and text
set forth elsewhere in this proxy statement.
GENERAL COMPENSATION POLICY. The overall policy of the Committees is to
offer the Company's executive officers competitive compensation opportunities
based upon their personal performance, the financial performance of the Company
and their contribution to that performance. One of the primary objectives is to
have a substantial portion of each executive officer's compensation contingent
upon the Company's performance as well as upon such executive officer's own
level of performance. Each executive officer's compensation package is generally
comprised of three elements: (i) base salary, which reflects an individual's
position and responsibilities, as well as past performance, and is generally
designed primarily to be competitive with the salary levels of the Company's
competitors in the semiconductor industry, (ii) annual variable performance
awards payable in cash and tied to the achievement of annual performance goals
and (iii) long-term stock-based incentive awards designed to strengthen the
mutuality of interests between the executive officers and the Company's
stockholders. Generally, as an executive officer's level of responsibility
increases, a greater portion of such executive officer's total compensation will
be dependent upon Company performance and stock price appreciation rather than
base salary.
FACTORS. Several important factors considered in establishing the
components of each executive officer's compensation package for the 1998 fiscal
year are summarized below. Additional factors were taken into account to a
lesser degree. The Committees may in their discretion apply entirely different
factors, such as different measures of financial performance, for future fiscal
years. However, it is currently contemplated that all compensation decisions
will be designed to further the overall compensation policy described above.
BASE SALARY. The base salary for each officer is primarily set on the basis
of personal performance and internal comparability considerations, and, to a
lesser extent, on the financial performance of the Company.
ANNUAL INCENTIVE COMPENSATION. For the 1998 fiscal year, the Company had no
formal bonus program and no bonuses were paid.
10
<PAGE> 13
LONG-TERM STOCK-BASED INCENTIVE COMPENSATION. Generally, the Stock Option
Committee approves annual grants of stock options to each of the Company's
executive officers under the 1982 Option Plan. The grants are designed to align
the interests of each executive officer with those of the stockholders and
provide each individual with a significant incentive to manage the Company from
the perspective of an owner with an equity stake in the business. Each grant
generally allows the officer to acquire shares of Common Stock at a fixed price
per share (the market price on the grant date) over a specified period of time
(up to 10 years), thus providing a return to the executive officer only if the
market price of the shares appreciates over the option term and the officer
continues in the Company's employ. The size of the option grant to each
executive officer is designed to create a meaningful opportunity for stock
ownership based upon the executive officer's current position with the Company,
internal comparability with option grants made to other Company executives, the
executive officer's current level of performance and the executive officer's
potential for future responsibility and promotion over the option term. The
Stock Option Committee also takes into account the number of vested and unvested
options held by the executive officer in order to maintain an appropriate level
of equity incentive for that individual. However, the Stock Option Committee
does not adhere to any specific guidelines as to the relative option holdings of
the Company's executive officers. In fiscal year 1998, no option grants were
made to the executive officers, except a grant to Mr. Middleton in connection
with his promotion to Vice-President, Manufacturing Operations. Each of the
officers participated in an option exchange program. See "Stock Option
Repricing" above.
CEO COMPENSATION. In setting the compensation payable to Dr. Salsbury, the
Company's Chief Executive Officer during fiscal 1998, the Compensation Committee
sought to make his overall compensation competitive with the Company's
competitors in the semiconductor industry, while at the same time tying a
significant percentage of such compensation to Company performance and stock
price appreciation. The Compensation Committee established Dr. Salsbury's base
salary for fiscal 1998 with the intent to provide him with a minimum level of
compensation not tied to any significant degree to Company performance factors.
No option grants were made to Dr. Salsbury in 1998, except that each of the
officers participated in an option exchange program. See "Stock Option
Repricing" above.
Submitted by the Compensation Committee and Stock Option Committee of the
Board of Directors:
Alan V. Gregory, Member, Compensation and Stock Option Committees
Charles C. Harwood, Member, Compensation and Stock Option Committees
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee or Stock Option Committee.
TERMINATION OF EMPLOYMENT ARRANGEMENTS
In July 1987, the Company's Board of Directors adopted a special Severance
Pay Program for the benefit of its executive officers. Under the program, a
participant who voluntarily terminates such participant's employment within 12
months following a change in control of the Company will remain as a consultant
to the Company for a maximum of six months following such termination of
employment. For each month during the period the participant is available to
provide consulting services, the Company will pay the participant 1/12th of such
participant's then current annual compensation (i.e., annualized base salary for
the year plus the amount of any commissions, cash bonuses and deferred
compensation for the prior year). A participant whose employment is
involuntarily terminated within 18 months of a change in control will receive a
lump sum severance payment equal to l.5 times such participant's then current
annual compensation. Under the program, full vesting of all outstanding stock
options may also occur upon certain changes in control, and the participants
will have the right, in the event of a hostile change in control, to surrender
their options for a cash distribution equal to the difference between the
aggregate fair market value of the shares purchasable under their options and
the aggregate exercise price payable for such shares ("limited stock
appreciation rights"). Under no circumstances may the aggregate value of the
payments and benefits under the program exceed
11
<PAGE> 14
three times the participant's average W-2 wages for the five calendar years
immediately preceding the calendar year in which the change in control occurs.
For purposes of the program, a change in control will occur in the event of (i)
a stockholder-approved merger or acquisition of the Company in which 50% or more
of the Company's outstanding voting stock is transferred to different holders,
(ii) the acquisition of 25% or more of the Company's outstanding voting stock
pursuant to a tender or exchange offer which the Company's Board of Directors
does not recommend the stockholders of the Company accept, or (iii) a change in
the composition of the Board of Directors which results in members of the Board
who were elected at the last uncontested election of Board members ceasing to
comprise a majority of the Board by reason of a contested election. Each of the
Named Executive Officers is a participant in the Severance Pay Program.
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company with that of the S&P 500 Stock Index, a broad market
index published by the Standard & Poor's Corporation, and the H&Q Semiconductor
Index, a semiconductor company stock index published by Hambrecht & Quist
Incorporated. The comparison for each of the periods assumes that $100 was
invested on September 30, 1993 in Common Stock, the stocks included in the S&P
500 Stock Index and the stocks included in the H&Q Semiconductor Index. These
indices, which reflect formulas for dividend reinvestment and weighting of
individual stocks, do not necessarily reflect returns that could be achieved by
individual investors.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG
SEEQ TECHNOLOGY INCORPORATED, THE S&P 500 INDEX, AND THE
HAMBRECHT & QUIST SEMICONDUCTOR INDEX
<TABLE>
<CAPTION>
SEEQ TECHNOLOGY HAMBRECHT & QUIST
INCORPORATED S&P 500 SEMICONDUCTOR
--------------- ------- -----------------
<S> <C> <C> <C>
'9/93' 100 100 100
'9/94' 77 104 103
'9/95' 327 135 208
'9/96' 282 162 156
'9/97' 230 227 311
'9/98' 64 248 178
</TABLE>
- ---------------
* $100 INVESTED ON 09/30/93 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS
FOR FISCAL YEARS ENDING SEPTEMBER 30
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the preceding Compensation
and Stock Option Committee Report on Executive Compensation and the preceding
Company Stock Performance Graph shall not be incorporated by reference into any
such filings; nor shall such Report or Graph be incorporated by reference into
any future filings.
13
<PAGE> 16
PROPOSAL NO. 2:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company is asking the stockholders to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent public accountants for
the fiscal year ending September 26, 1999. The affirmative vote of the holders
of a majority of the shares represented and voting at the Annual Meeting will be
required to ratify the selection of PricewaterhouseCoopers LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if the Board determines that such a
change would be in the best interest of the Company and its stockholders.
PricewaterhouseCoopers LLP has audited the Company's financial statements
annually since its inception. Its representatives are expected to be present at
the Annual Meeting, will have the opportunity to make a statement if they desire
to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL TO RATIFY THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR THE FISCAL YEAR ENDING SEPTEMBER 26, 1999.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
COMPANY'S REPORT ON FORM 10-K FOR FISCAL YEAR 1998, INCLUDING THE FINANCIAL
STATEMENTS, SCHEDULES, AND LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO SEEQ
TECHNOLOGY INCORPORATED, 47200 BAYSIDE PARKWAY, FREMONT, CALIFORNIA 94538, ATTN:
INVESTOR RELATIONS.
14
<PAGE> 17
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 2000
annual meeting of stockholders must be received at the Company's principal
executive offices not later than October 8, 1999 in order to be included in the
Company's proxy statement and form of proxy relating to the 2000 annual meeting.
Pursuant to new amendments to Rule 14a-4(c) of the Securities Exchange Act of
1934, as amended, if a stockholder who intends to present a proposal at the 2000
annual meeting of stockholders does not notify the Company of such proposal on
or prior to December 12, 1999, then management proxies would be allowed to use
their discretionary voting authority to vote on the proposal when the proposal
is raised at the annual meeting, even though there is no discussion of the
proposal in the 2000 proxy statement. The Company currently believes that the
2000 annual meeting of stockholders will be held during the last week of
February 2000.
By order of the Board of Directors
/s/ Gary R. Fish
GARY R. FISH
Secretary
January 26, 1999
15
<PAGE> 18
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SEEQ TECHNOLOGY INCORPORATED
PHILLIP J. SALSBURY and GARY R. FISH, or either of them, are hereby
appointed as the lawful agents and proxies of the undersigned (with all powers
the undersigned would possess if personally present, including full power of
substitution) to represent and to vote all shares of capital stock of SEEQ
Technology Incorporated (the "Company") which the undersigned is entitled to
vote at the Company's Annual Meeting of Shareholders on February 25, 1999, and
at any adjournments or postponements thereof as follows:
1. The election of all nominees listed below for the Board of
Directors, as described in the Proxy Statement:
Alan V. Gregory, Charles H. Giancarlo and Phillip J. Salsbury
FOR [ ] AUTHORIZATION WITHHELD [ ]
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write such name or names in the space provided
below.)
2. Proposal to ratify the appointment of PricewaterhouseCoopers
LLP as independent accountants of the Company for the fiscal year
ending September 26, 1999:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Transaction of any other business which may properly come
before the meeting and any adjournment or postponement thereof.
<PAGE> 19
The Board of Directors recommends a vote FOR each of the above proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR EACH OF THE ABOVE PROPOSALS AND, AT THE DISCRETION OF THE PERSONS
NAMED AS PROXIES, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. This proxy may be revoked at any time before it is voted.
DATE: , 1999
------------------------
-------------------------------------
(Signature)
-------------------------------------
(Signature if held jointly)
(Please sign exactly as shown on your stock certificate and on the
envelope in which this proxy was mailed. When signing as partner,
corporate officer, attorney, executor, administrator, trustee,
guardian or in any other representative capacity, give full title
as such and sign your own name as well. If stock is held jointly,
each joint owner should sign.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
